Elizabeth Holmes and the future of bio-sensors
Have you seen HBO’s Theranos documentary yet? The film (1) nails a key contradiction about Elizabeth Holmes’ entrepreneurial character, (2) uncritically accepts Holmes definition of “disruption,” a mistake that obscures the real future of the medical industry, and (3) wrongly suggests that because Holmes’ company failed, her dream is false.
Holmes IS an entrepreneur.
Obviously, Elizabeth Holmes is an epic con artist on par with Bernie Madoff. She manipulates language, emotions and social expectations to create a pervasive illusion that sucks in almost everyone around her. She does this so skillfully and relentlessly that she’s drunk her own coolaid. She’s epically delusional.
Yet, as disturbing, odd and annoying as Holmes is — what’s up with that akilter stride?! — her thought patterns and aspirations are NOT qualitatively different from the average entrepreneur’s. An entrepreneur looks at an abandoned gas station and sees a gleaming diner; says “when we succeed” rather than “if;” will dive into an empty swimming pool, knowing that if enough people dive too, the pool will fill with water in time to float them all. The difference? The average entrepreneur lacks Holmes’ uncanny ability to cultivate and curate adoration, so is forced to accept daily feedback — from business partners, family members, potential customers and colleagues — that her/his dream is not YET a reality.
Theranos was NOT “disruptive.”
Holmes and her supporters regularly argued that she was “disrupting” the blood analysis industry. Non-startup geeks don’t realize that Holmes was invoking a specific business school idiom to convince investors she’d succeed. The argument: by reducing the form-factor, price and pain of blood sampling, Theranos would vastly expand the market for blood analysis — testing more people more often. This “disruption,” the theory goes, would unseat industry giants Labcore and Quest, just as Apple and Dell ultimately disrupted DEC, UNIVAC and NCR.
But, for aficiandos of industry life cycles, “disruption” has a vast literature and very specific meaning. And two crucial characteristics — beyond lower price, smaller form factor and simplicity — are missing from the Theranos story. First, while Theranos had to immediately compete head to head with Labcore and Quest on quality — lives were at stake — disruptive companies almost always start with products that are simple and weak in peripheral, underserved markets. Then, very slowly, they improve their offering. This can take decades. Second, disruption is organic, collaborative, iterative. Competitors copy each other. New vendors emerge to supply parts. New sales models or channels emerge. Customers ask for new features. The product improves enough to “disrupt” the incumbents, who have never adjusted their prices, sales methods or value proposition. Sure, eventually a giant killer or two emerges from the pack to “win,” but that’s only after decades of ferment and foment. Theranos wanted to be a beaver when the forest needs termites.
Holmes DOES see the future.
Sure, Holmes lied incessantly about what her company’s product was capable of achieving. Sure, the technology isn’t there yet.
Yet her Jetsonesque dream — that someday we’ll have a blood testing machine in every home and will be able to diagnose illnesses years sooner than we do now — IS inevitable sometime in the next 10–20 years, thanks to the truly disruptive iterative collaboration of thousands of device makers, coders and consumers.
Here’s the trailer: https://www.youtube.com/watch?v=wtDaP18OGfw
